LendingClub Corp (NYSE:LC) Stock Soars As Banks Prove To Be Hypocrites

- August 9, 2017

When the market realized that LendingClub Corp’s (NYSE:LC) former CEO and founder falsified loan documents, on a very minor scale, two things happened immediately. First, LC stock crashed, falling to $3.5 from a high over $25/share. Second, banks pulled back, saying they would no longer purchase LendingClub Corp (NYSE:LC) loans.

Importantly, peer to peer lending is the fastest growing industry in lending, and while there are a lot of players in the game, LendingClub is one of the largest. On many occasions over the last year, BNL Finance has told members that banks would come back and that LC stock losses were overdone.

With that said, LendingClub stock has rallied 26% over the last three sessions. While better than expected second quarter revenue and overall loan originations are considered the cause, a deeper look unveils what exactly caused the accelerated gains in originations and revenue. Ironically, it was the banks buying loans, as seen above.

In the second quarter, bank loan originations rose a whopping 75% year-over-year. In comparison, total loan originations grew just 10%.

As seen in the chart above, the banks did not stay mad long, with loans from banks accounting for a higher percent of overall originations than ever before.

After all, LendingClub loans have proven to be safe over the years, and with interest rates on the rise, it is good business to buy such loans. Therefore, with banks clearly a big part of the LendingClub stock story, we think there is a good chance that post earnings gains in LC stock will last. More than likely, LC stock is going even higher.

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